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Box 890 Sentrum Dr Kristina Spohr-Readman, London School of N-0104 OSLO, Norway Economics Phone +47 23 09 77 00 Dr Maria Strömvik, University of Lund Fax + 47 23 09 77 49 Dr Henning-André Frantzen, The Norwegian e-mail: [email protected] Ministry of Defence Prof. Rolf Hobson, Norwegian Institute for De- The Norwegian Institute for fence Studies. Defence Studies The Norwegian Institute for Defence Studies Advisory board is an independent institute administratively Prof. Wilhelm Agrell, University of Lund attached to the Norwegian Defence University Prof. Mats Berdal, King’s College London College. The Institute conducts independent Prof. Beatrice Heuser, University of Reading research on Norwegian security and defence Dr Johnny Laursen, University of Aarhus policy, military concepts and theory, Dr Joseph Maiolo, King’s College London international conflicts and cooperation and Prof. Helge Pharo, University of Oslo transatlantic relations. The Consultative Prof. Kimmo Rentola, University of Turku Board for Defence Studies assists the Institute Dr Tomas Ries, Director, Swedish Institute of in developing and conducting research International Affairs programmes. The Board is composed of Prof. Patrick Salmon, Chief Historian, Foreign representatives from the defence establishment and Commonwealth Office, London and the University of Oslo. Julianne Smith, Director Europe Program, CSIS, Director: Professor Rolf Tamnes. Washington D.C. ISSN: 1504-6532 Prof. Emeritus Krister Wahlbäck, University of ISBN: 978-82-91571-10-2 Umeå and Ministry for Foreign Affairs, Stock- holm Prof. Øyvind Østerud, University of Oslo. DSS-1_2009_revidert.indd 2 24.04.2009 09:38:06 Norwegian oil policy on Svalbard The Caltex case 1960–67 Contents page Introduction 5 Research questions 6 Svalbard and the Cold War literature 7 Perceptions of threats and the “Svalbard System” 9 Methodological approach 10 Historical background 13 The Svalbard Treaty 14 The mining ordinance 18 Svalbard and the Cold War 20 Business activity on Svalbard 29 The Cold War and Norwegian sovereignty 32 Oil exploration on Svalbard 35 Caltex – primus motor 36 Behind the scenes at the Ministry of Industry 45 Property rights on Svalbard 61 Andenæs’ contention of the participation right 68 Lindstrøm and Holler versus Evensen and Lange 77 Negotiations with Caltex 87 1961–1967: The State’s right of ownership reformed 101 Conclusion 105 Bibliography 113 Defence and Security Studies and Forsvarsstudier - backlist 121 DSS-1_2009_revidert.indd 1 24.04.2009 09:38:06 DSS-1_2009_revidert.indd 2 24.04.2009 09:38:06 Norwegian Intitute for Defence Studies Norwegian oil policy on Svalbard The Caltex case 1960–67 Abbreviations MFA The Ministry of Foreign Affairs MI The Ministry of Industry NPN Norsk Polar Navigasjon Norwegian oil policy on Svalbard started in 1961 when the American oil company, Caltex, won claims on the archipelago. When conferring the claims, the Ministry of Industry ignored a statute pertaining to handing in deposit samples. Geological indications of the possibility of oil be- ing present were deemed sufficient. Whether this decision might have foreign political implications, especially vis-à-vis the Soviet Union, was not considered. However, the lenient treatment of Caltex established a precedent. The Svalbard Treaty’s principle of non-discrimination created opportunities for other companies. Soon, both the Norwegian company, abstract Norsk Polar Navigasjon, and the Russian company, Arktikugol, started searching for oil on Svalbard. To the Norwegian Ministry of Foreign Affairs it became evident that the government had to take a more active approach on Svalbard if Norway was to control the situation. This policy was initially challenged by Cal- tex and the Ministry of Industry, but by the summer of 1963, Norwegian Svalbard policy had taken a new course. From then on the Norwegian government utilized its legislative authority to a much larger degree than before, resulting in several regulatory actions on the archipelago. KEYWORDS: Svalbard, Spitsbergen, Norwegian oil policy, Norwegian foreign policy, High North ISSN 1504-6532 • ISBN 978-82-91571-10-2 © Norwegian Institute for Defence Studies [email protected] – www.ifs.mil.no DSS-1_2009_revidert.indd 3 24.04.2009 09:38:06 DSS-1_2009_revidert.indd 4 24.04.2009 09:38:06 Chapter 1 Introduction Located between 10º and 35º East and between 74º and 81º North, the archipelago of Svalbard is the northernmost part of Norway. Once im- agined as the jewel of Norway’s Arctic possessions, it was recognized as Norwegian by the Svalbard Treaty of 1920.1 The treaty subjected the recognition of Norwegian sovereignty to stipulations, which have caused a number of disputes between Norway and other parties to the treaty, some of which remain unresolved. The sovereign’s sole right to petroleum deposits on the continental shelf surrounding the archi- pelago and fishery regulation in the adjacent seas are the main bones of contention. This study analyzes the formative stages of Norwegian oil policy on Svalbard from 1960 to 1967. But notably, current disputes and the dispute analyzed in this study basically follow the same lines: it is a question of the real content of Norwegian sovereignty. During the scope of time of this study, the American oil company Caltex2 was a central figure. Throughout the 1960s it was keenly in- terested in Svalbard, and although it was not the only company in- terested, it was the first one. Norwegian oil policy on Svalbard thus largely resulted from the challenges created by Caltex’s activity on the archipelago. Moreover, the Norwegian authorities’ treatment of Caltex was harshly criticized, giving rise to the phrase “the Caltex case”. This study is in six chapters. In the first chapter, the theme and re- search questions of the study are introduced, as are theoretical perspec- tives and research contributions. Chapter two summarizes Svalbard’s history from the beginning of the 1900s to the 1960s, focusing on 1 Its official name is “Treaty between Norway, The United States of America, Den- mark, France, Italy, Japan, the Netherlands, Great Britain and Ireland and the British overseas Dominions and Sweden concerning Spitsbergen signed in Paris 9th Febru- ary 1920”. For simplicity, “the Svalbard Treaty” or “the treaty” will be used in this study. 2 California Asiatic Oil Company & Texas Overseas Petroleum Company. DSS-1_2009_revidert.indd 5 24.04.2009 09:38:06 6 Defence and Security Studies 1-2009 the archipelago’s position in international law and on foreign politi- cal challenges to Norway’s sovereignty over Svalbard. Chapters three and four deal with oil interests on Svalbard, and how the Norwegian authorities managed these. The way in which oil interests challenged Norwegian sovereignty and the reaction of the Norwegian authori- ties to this are focused on. The concluding chapter summarizes the research findings and synthesizes the arguments introduced in the pre- vious chapters. Research questions The Svalbard Treaty and the Cold War both strongly influenced Norway’s Svalbard policy. According to MP Torstein Selvik (Norwegian Labour Party), “… practically all Svalbard matters have a foreign political as- pect, and in many cases the foreign political aspect is dominant”.3 The Caltex case was no different. This main aim of this study is to investi- gate how oil interests threatened to undermine Norwegian sovereignty over the archipelago, and how Norwegian countermeasures reversed this development. As a result, Norway’s exercise of sovereignty became strengthened from 1960 to 1967. Within this main framework, three more questions will be asked. First, the Norwegian oil policy for Svalbard was first drafted at the Ministry of Industry (MI) and was based on how Caltex’s modern oil exploration techniques could fit with old regulations designed for coal mining. The result was surprisingly liberal. Based on